Core Obligations
Every Israeli employer must: (1) withhold income tax from employee salaries and remit to the ITA, (2) withhold and contribute National Insurance and health insurance premiums, (3) contribute to mandatory pension (7.5% employer share + 8.33% severance), (4) issue monthly and annual reports, and (5) provide Form 106 to each employee annually. Failure to comply creates personal liability for directors.
Monthly Employer Obligations
| Obligation | Due Date | Form/Report |
|---|---|---|
| Income tax withholding | 15th of following month | Form 102 |
| NI and health insurance | 15th of following month | Payment via NII |
| Pension contributions | 15th of following month | To pension fund |
| VAT return (if applicable) | 15th of following month | VAT return |
Annual Employer Obligations
| Obligation | Due Date | Form/Report |
|---|---|---|
| Annual deduction summary | April 30 | Form 126 |
| Employee annual certificate | March 31 | Form 106 (per employee) |
| Annual tax return | May 31 (with extensions) | Form 1301 |
Key Points
- Late payment of employee deductions: 5% penalty per month + interest
- Failure to provide pension: employer liable for compensation
- Directors can be personally liable for unpaid employee deductions
- Payroll software must be updated annually for new tax brackets and NI rates
- Keep payroll records for at least 7 years
בסיס חוקי
- Section 164 – Withholding obligations
- Section 166 – Reporting obligations
- Pension Directive 2008 – Mandatory pension
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.